Domestic car sales have registered a tepid 1.6 per cent year-on-year growth in June, with manufacturers blaming it on negative consumer sentiment arising from rising interest rates and higher fuel costs.

The first quarter of the current fiscal has seen car sales growing by 7.3 per cent. Passenger vehicles on the whole have recorded a growth of 4.2 per cent in June and 8.8 per cent for the quarter. But on the other hand, two-wheelers, including motorcycles, have recorded robust sales during June as well as the first quarter.

The other significant trend from the data put out by the Society of Indian Automobile Manufacturers (SIAM) here relates to commercial vehicle sales, with light commercial vehicles (LCV) showing impressive growth of 29.4 per cent in June, against a mere 6.1 per cent for medium and heavy commercial vehicles.

Based on the data so far, SIAM has downgraded its car sales outlook for 2011-12, with growth being now estimated at 10-12 per cent against the earlier 16-18 per cent.

“We are, however, expecting a double-digit growth at the end of the financial year for the entire auto sector,” said Mr Sugato Sen, Senior Director at SIAM.

According to him, the series of car launches scheduled for the second half – besides softening of key commodity input prices and festive season demand – will compensate for the lower Q1 growth.

Labour unrest, which led to a 13-day production stoppage at Maruti Suzuki's Manesar plant, was an additional factor leading to the tepid sales in June. “We don't foresee any more such events in the coming months,” he said.

Mr Sen also pointed out that the 35-40 per cent growth witnessed last year was not sustainable. “It should not be treated as a benchmark for future performance. 12-13 per cent is a decent growth rate,” he added.

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